Agile Operations: COVID-19 Forces a New Reality for Healthcare Finance, According to Michael Allen, CFO at OSF Healthcare

Michael Allen has unique expertise in healthcare finance. He’s
been chief financial officer at four different health systems and
is national chairman of the Healthcare Financial Management
Association (HFMA) where he regularly interacts and shares
knowledge with peers in the 56,000-member organization.

Michael calls HFMA his side hustle and is going on his second
year of a one-year term since the organization froze its
leadership to provide stability during the COVID-19 pandemic. His
primary role is CFO at OSF Healthcare, a faith-based health
system in Peoria, Illinois with 23,600 Mission Partners in 147
locations, including 14 hospitals.

Since the pandemic started, the Healthcare is Hard podcast has
explored how health systems are dealing with it from multiple
angles including from the CEO, CIO, regulatory, governance and
supply chain perspective. In this episode, Keith Figlioli talks
to Michael Allen to learn how finance leaders are supporting the
healthcare industry and their organizations through this trying
time.

Michael talks about how healthcare has historically not been very
agile because realities like fixed costs, reliance on bricks and
mortar and steady organic growth meant that it didn’t have to be.
But he talks about the new need for agility, how OSF is adapting,
and how some steps the organization took before the pandemic put
it in a better position to respond. The topics Michael and Keith
discuss include:



Supporting quick decisions. Through its emergency
operations center created to navigate the pandemic, Michael
says OSF learned how slow the organization had previously been
at making decisions. This wasn’t an issue before because it
worked, but COVID forced a need for change. Instead of
including everyone in every decision, Michael talks about how
OSF learned to rely on small groups to make decisions, vet
those decisions with the larger group, and then move forward
quickly.


Spending less time in the rear view. Michael is working
to flip the traditional model of healthcare finance. Instead of
looking backwards and planning based on previous experiences,
Michael is directing his team to spend most of their time
looking forward. For example, no one in healthcare knows what
their future revenue stream will look like as the payer mix
shifts and the average payment rate for services is likely to
decline. This is why it’s critical for finance teams to spend
more time forecasting and ensuring they’re nimble enough to
respond to any situation.


Eliminating the annual budget process. OSF entered its
fiscal year starting October 2019 without a traditional budget.
Michael and his team still updated their long-term financial
plan and set financial targets on an annual basis, but spent
less time on individual line items. Instead, they focused more
on forecasting and dynamic planning, including measurement and
processes for reacting to issues. This proved to be invaluable
when the pandemic hit and as the healthcare industry faced
rapid change, enabled OSF to quickly gather the information it
needed, build forecasts, and move quickly.


Creating an environment where innovation is inherent.
Another area that bolstered OSF’s response to the pandemic is
its focus on innovation – something Michael says has always
been an integrated part of the organization versus a separate
entity. In OSF’s venture arm for example, investments are never
solely made for their financial benefits, but must also be
doing something positive for the organization and be endorsed
by clinical leaders. As the response to COVID-19 placed digital
touchpoints first, this gave OSF a running head start in how it
adapted.



Hear Michael and Keith dig into these topics and more in this
episode of Healthcare is Hard: A Podcast for Insiders.